The Demand for Fertilizer When Markets Are Incomplete: Evidence from Ethiopia



The under-utilization of fertilizers is viewed as a hurdle to the adoption of more productive and sustainable agricultural techniques in sub-Saharan Africa. In this chapter, we investigate the role incomplete markets play in determining the use of chemical fertilizers among Ethiopian farmers with the aim of identifying policies that would encourage the adoption of profitable and sustainable agricultural practices. The results of regression analysis show that high transport costs, illiteracy, adverse local climates, and limitation in risk and credit markets are major constraints on the functioning of fertilizer markets, suggesting that government actions to close knowledge gaps and lower transportation costs can increase fertilizer use among farmers.


Green Revolution Chemical fertilizer Organic fertilizer Soil fertility Incomplete markets Credit markets Insurance markets 


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Copyright information

© The International Bank for Reconstruction and Development/The World Bank 2013

Authors and Affiliations

  1. 1.African Development BankTunis-BelvedèreTunisia
  2. 2.Development Research GroupWorld BankWashingtonUSA

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